Clinical trial fraud accusations rock MannKind ($MKND) stock

MannKind's ($MKND) former senior director for regulatory affairs John Arditi is alleging that the company hid "scientific misconduct" from regulators. In a lawsuit filed Sept. 16, Arditi said he uncovered irregularities at Russian and Bulgarian trial sites, noting that patients at the Russian site were recorded as having the same blood pressure at several visits--something that is highly unlikely. In Bulgaria, patients were said to have been treated with the drug despite the fact that Afrezza packing slips indicate the drug had not yet been delivered to the site. Both issues points to the possibility of fake patients. The former exec further alleges that he was fired after bringing the issue to the company's attention.

Not surprisingly, MannKind's stock was hit hard, falling the most in a single day since the FDA delayed approval of inhaled insulin drug Afrezza on March 15. The lawsuit is extremely bad news for the company, which has a PDUFA date of December 29 for Afrezza. The FDA is cautious with international data and may extend the review time to examine the data. "I assume the FDA will now dig through the data with a fine-tooth comb and it could lead to a delay if they request additional information about this specific data," Rodman & Renshaw analyst Simos Simeonidis tells Bloomberg. However, in a PharmaTimes article, Renshaw adds that he finds it hard to believe MannKind senior management would have supported fraudlent data. "...I wouldn't be surprised if this ends up being a case of a disgruntled employee trying to get back at the company who fired him," noted Simeonidis.

In a regulatory filing, MannKind says it conducted its own investigation of the charges and hired an outside firm to evaluate the situation as well. Neither investigation uncovered misconduct. "The company believes that the allegations in the complaint are without merit and intends to defend against them vigorously." MannKind has until December 3 to respoind to the suit.

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